Italy's banks back digital euro, want costs spread over time

FLORENCE, Italy (Reuters) -Italian banks support the European Central Bank's digital euro project but want investments required by them to implement it to be staggered over time because the costs are high, a top official of the Italian Banking Association (ABI) said.

The ECB has been working on a digital version of the single currency to strengthen the euro area's monetary sovereignty, but the legislative process has been slow as some French and German banks in particular have opposed the project. They say it could see millions of Europeans use an online ECB wallet for daily payments, draining away their bank deposits.

"We're in favour of the digital euro because it embodies a concept of digital sovereignty," ABI General Manager Marco Elio Rottigni told a press seminar in Florence on Friday.

"Costs for the project, however, are very high in the context of the capital expenditure banks must sustain, they could be spread over time."

The ECB's plan aims to ensure that central bank money remains accessible and relevant in an increasingly digital economy, while also reducing reliance on non-European payment service providers, and responding to the rise of stablecoins.

At its meeting in Florence on October 29-30, the ECB's Governing Council decided to advance the digital euro project to its next phase, after completing a two-year preparation period.

The launch is expected in 2029 after a pilot phase in 2027, contingent on the adoption of EU legislation expected in 2026. 

European parliament member Fernando Navarrete, of Spain's Partido Popular, is heading the parliament's assessment of the digital euro. On October 28 he presented his draft report promoting a scaled down version of the scheme to safeguard private payment initiatives such as Wero, which is backed by 14 European lenders.

"We're in favour of a twin approach, a central bank digital currency and commercial bank digital currencies which may develop faster, because what Europe shouldn't do is fall behind," Rottigni said.         

(Reporting by Valentina Za; Editing by Susan Fenton)